Tuesday, September 06, 2016

Smith: In 2013, the tariffs charged by the U.S. government on its apparel imports from Bangladesh alone exceeded the total wages received by the workers who made these goods. The states uses this money, as we know, to finance foreign wars, health care, and Social Security,...TWR: Not really. 1) The tariff imposed on these imported goods has nothing to do with increased exploitation of workers in Bangladesh. In fact, it was the opposite, the easing of tariffs under the MFA, and the final incorporation of the world garment trade under the provisions of the general agreements that facilitated the outsourcing of garment production, and in 2005, the relentless pressure put on workers everywhere by the ending of quotas on China's portion of this trade. Mr. Smith never mentions the MFA, or the subsumption of the fabric and garment sectors under the general agreements, a remarkable omission for anyone trying to apprehend the forces unleashed in the outsourcing process. 2) Tariffs are irrelevant, absolutely meaningless, as a source of revenue in the US. Tariffs as a percentage of government revenues has declined steadily since 1914. Today, tariffs represent about 1 percent of total government receipts. The tariffs imposed on garments from Bangladesh amount to 1/4000th of US government receipts. 3)Social Security in the US is not financed by tariff receipts. Social Security is exclusively funded by the payroll tax and deductions from workers, and interest received on the US government securities in which that money is invested.

Smith: Just thirty of the 13, 920 US workers [of Apple] were production workers (receiving on average $47,640 per year) 7,789 were "retail and other non-professional workers (average wages $25,580)....TWR: Really?A worker in the US with an income level of $25,580, supporting 3 other family members has just enough income to be almost not-poor. This is the great benefit outsourcing has bestowed upon hundreds of thousands in the "advanced" countries-- the chance to be "retooled" as retail workers rather than production workers, earning half the money, and almost not-poor.

Smith: From the early 1960s, while the emerging retail giants were pioneering the outsourcing of toys, clothing, and other consumption goods, prominent electronics firms such as Cisco, Sun Microsystems, and AT&T were unleashing what was soon to become a torrent of outsourcing by hightech industry.TWR: Not really. Sun and Cisco couldn't unleash anything from the early 1960s. They didn't exist. Sun and Cisco were founded in 1982 and 1984 respectively. Sun, headquartered in California, had two production centers for building its SPARC workstations, one in Scotland and one in Oregon.Smith: Unlike simple commodity producers who sell in order to buy, merchants buy in order to sell. Their aim is not to acquire something they need. But to acquire money....

TWR: Really? Can someone point out an example of a simple commodity producer, or a system of simple commodity production? Marx did not use those terms, referring instead to simple commodity exchange. What is simple commodity production? How and when does simple commodity production exist as a dominant mode of production? Were the social organizations of the Incas and Aztecs "simple commodity production"? How about the feudal orders with their extensive grain trading networks? Simple commodity production? And this "selling to buy" vs. "buying to sell" is just a tad one-sided don't you think? The merchant also sells in order to buy, unless of course he or she makes enough in one circuit to withdraw from all future circuits, but then, if that were to be the mode of accumulation for all merchants, the system wouldn't really be a system would it? It would be a "one-off" where accumulation basically disappeared. The merchant may or may not do any number of things. The simple commodity producer may or may not exist (I vote for the latter). But the capitalist always expropriates the labor-power of others. The capitalist does this through the "mediation," the relations of.......property, the means of production as private property that not only can, but must command that labor power to valorize production. That's the critical distinction.Smith: In contrast, "the rate of productivity growth in US manufacturing increased in the mid-1990s, greatly outpacing that in the services sector and accounting for most of the overall productivity growth in the US economy.....#TWR: Really. Word. Let's keep this in mind as we move on.Smith: "In the case of the United States...offshore outsourcing of jobs is the functional equivalent of 'imported productivity,' as the global labor arbitrage substitutes foreign labor content for domestic labor input."TWR: Well, that didn't last long, did it? Would love an example, wouldn't you? I mean first and foremost, we need to forget all about imported t-shirts, and coffee, and I-phones, which are marketed by retailers, and thus the make-ups, and mark-ups of these items have no impact on productivity in manufacturing or industry.

Secondly, the cost of the inputs of intermediate goods to production itself, say the production of automobiles, cannot have any impact on the productivity of labor, if we define productivity as the greater output of articles, use-values, per unit of labor-power. If improvements in productivity, in the mass of goods per hour/day/week, leave unchanged the total accumulated new value, then the cost of the intermediate inputs cannot have any impact on productivity.

If an automaker spins off as a separate entity, a "supplier," and a brigade of workers into a separate company to do the work "out of house" that used to be done in house, then in fact the automaker can show a reduction in hours needed to produce each automobile, but the total hours embodied in each automobile remain the same.

If it now takes an automaker in the US 23 hours, on average to produce, an automobile as it does, (down from 27 in 2004 as it was), and a portion of that improvement in output is due to a component that was made in-house requiring 1 hour is now outsourced and falls off the automakers production time accounting, that change makes no difference to the value of the automobile, and it does not alter the improvement in productivity the manufacturer experiences. The auto manufacturer still requires less living labor to animate the accumulated capital in the means of production and produce a greater number of automobiles.

It makes no difference to "productivity" if the seat cushions are produced in China by workers making the equivalent of $2 per hour, of if they are produced in Canada by workers making $26 per hour. It, the cost, makes a difference in the value of the product, not to how quickly the worker installs the seat cushion, or how quickly the worker reproduces the value equivalent to his/her wage.

Mr. Smith takes great pains to show how wages are not dependent upon productivity....until it comes time to assess, realistically, how gains in productivity has been made in the advanced countries, and then he tells us that the "productivity is imported."

Smith: Competition between firms in imperialist and developing countries does exist. Even in the garment sector.....TWR: Really. Let's keep that in mind, too

Smith: The integration of the Global South into the imperialist world economy since the Second World War and especially since 1980 brings together both of these trends, the dispossession of small farmers and other small producers on the one hand and the substitution of wage labor by machinery on the other. TNCs [transnational corporations] and domestic capitalists not only exploit low-wage labor, they can can do so with advanced production processes that absorb far less living labor than those available to nineteenth-century European capitalists.TWR: Really. Good. Really good. And we're right back in the grips of uneven and combined development, because capitalism still cannot "resolve" the "land question," cannot capitalize agriculture sufficiently without threatening the very existence of private property, of the means of production as private property.

Smith: The Feminization of Labor, and the Proletarianizaton of WomenTWR: Really. Good. Really Good. "The face of globalization is the face of the exploited young woman worker."-- participant (female) interrupting Fidel Castro, from the floor, during the first meeting on Globalization and Problems of Development, Havana, Cuba 1999 (if memory serves me).

Smith: "Global Wage Trends in the Neoliberal Era": Thus the share of national income received by the bottom 90 percent of wage-earners (84 percent of the United States economically active population) earned 42 percent of the total payroll in 1980 and just 28 percent in 2011. Thus the share of national income received by the bottom 90 percent of US employees has declined....by a staggering 33 percent.According to the ILO's World of Work Report 2011, since the early 1990s the "share of domestic income that goes to labor...declined in nearly three-quarters of the 69 countries with available information," This decline is generally more pronounced in emerging and developing countries than in advanced ones.TWR: Really. Agree. Completely. So much for the benefit to the workers in the advanced countries. So much for the bounty that capitalism bestows upon developing countries.

Smith: Reducing the wage bill, not through investment in labor-savings technology or through wage cuts of domestically employed workers but through outsourcing to low wage countries, has dramatically risen in importance....What is especially ironic is that instead of being a means to raise the productivity of labor, new technology is being use to lower its cost through outsourcing; and instead of replacing labor through the introduction of more advanced machinery, capitalists are using new technology to replace labor with cheaper labor..........TWR: Really? Guess we should forget about the earlier stuff about the share of labor declining. There has been considerable investment in labor-saving technology in the advanced countries. And considerable declines in industrial employment, remember Mr. Smith? You pointed that out. I would point out that in the US employment in the steel industry has declined some 90 percent in 45 years, and the time required to produce a ton of steel has declined 80 percent. Or... I might point out that the fleet of container ships has grown fifteen fold since 1980, and 75 percent of that fleet is owned by...brokers based in Hamburg, Germany. Or that, while employment has dropped in the US rail industry, loaded ton-miles per crew hour have increased, crew sizes have declined, train lengths and weights have grown dramatically since 1980, and the capital values invested in locomotives, signal systems, communication networks, track has increased. There is nothing ironic about this. These contradictory element are the whole of capital. This is precisely how capital navigates between the rock and the hard place of increased extractions of surplus value and declining rates of profitability.

Smith: Marxists argue that this ideal state is itself absurd, pointing to the third and most fallacious assumption upon which modern trade theory and indeed the entire edifice of bourgeois economy theory is based--the conflation of value and price....

TWR: Not really. Marx produces the immanent critique to capitalism; a critique based on the internal make-up, requirements, assertions of the system itself. Marx accepts the relationship,and even, the identity of price and value in his critique. The failure of capitalism is not that price and value do not coincide. Indeed, Marx points out how any coincidence is just that, a coincidence, and is irrelevant to self-generation of the obstacles that capital only overcomes by expanding reproduction of these conflicts. The critique is of value, not of the non-correspondence between price and value.

Smith: The wage(or nominal wage) is the monetary expression of the value of labor-power; the real wage is the wage expressed in terms of purchasing power, by the size of the basket of consumption goods for which it can be exchange.

TWR: Really. So I would expect at this point Mr. Smith would investigate the real wage in Bangladesh, in Germany, in the US, in China so that we can see exactly what constitutes "super exploitation," both in quality and quantity. No such luck. Not happening. Instead we get critiques of David Harvey, Ernest Mandel; praise for the Monthly Review crew (and I thought the very rejection of value was a core principle of the Monopoly thumpers) and discussion of unequal exchange, dependency theories, "Euro-marxists," and... Marini.

Smith: For Marx, the transition from the predominance of absolute surplus-value to relative surplus-value was necessitated.....by the finite maximum length of the working day and the minimum level of consumption required for the reproduction of the labor-power...Marini argued that another factor played a crucial role in this transition: the importation of cheap foodstuffs, and other consumer goods from colonies, neo-colonies, especially from Latin America. TWR: Really. Very important to integrate the development of capitalism in the North, with developments in the South. We should all read Marini.

Really? The "transition" to relative surplus value, the "real domination" of capital begins in the 19th century, is well underway by the middle of that century, and tears across developed and developing capitalisms in the last-third of the 19th century, the period of the "long deflation." Looking at global wheat supplies and production in the last-third, we find the US increasing its production 1867-1898 fourfold, accounting for 26 percent of global supplies in 1867 and 36 percent of world supplies by 1898. Russia accounts for 23 percent of supplies at both the beginning and end of the period. Western Europe's share declines from 37 to 25 percent. So at the beginning at end of the period, while supplies increase approximately 240%, the US, Russia, and Western Europe continue account for 84 percent. We should all read Marini. Carefully.

Friday, September 02, 2016

The Parable of the T-shirt (also available here)
Mr. Smith starts his explorations into Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism's Final Crisis (Monthly Review Press, 2016) with the story of a T-shirt, a story taken from the pages of Tony Norfield's The China Price:

In The China Price Tony Norfield recounts the story of a T-shirt made in Bangladesh and sold in Germany for €4.95 by the Swedish retailer Hennes & Mauritz (H&M). H&M pays the Bangladeshi manufacturer€1.35 for each T-shirt, 28 percent of the final sale price, 40¢of which covers the cost of 400g of cotton raw material imported form the United States; shipping to Hamburg adds another 6¢ per shirt. Thus €0.95 of the final sale price remains in Bangladesh, to be shared between the factory owner, the workers, the suppliers of inputs and services and the Bangladeshi government, expanding Bangladesh'a GDP by this amount. The remaining €3.54 counts toward the GDP of Germany, the country where the T-shirt is consumed, and is broken down as follows: €2.05 provides for the costs and profits of German transporters, wholesalers, retailers, advertisers, etc., (some of which will revert to the state through various taxes); H&M makes a 60¢ profit per shirt; the German state captures 79¢ through VAT at 19 percent; 16¢ covers sundry "other items." Thus in Norfield's words, " a large chunk of the revenue from the selling prices goes to the state in taxes and to a wide range of workers, executives, landlords, and businesses in Germany. The cheap T-shirts, and a wide range of other imported goods, are both affordable for consumers and an important source of income for the states and for all the people in the richer countries."

Short version? Astounding news-- merchandisers buy low to sell high.

First things first: "to be shared between the factory owner, the workers, the suppliers of inputs..." Shared? Between the factory owner and the workers? Capitalists don't share profits with workers, not in Bangladesh, not in Germany, not in China, not in the US. They don't "share" even when they call compensation "profit sharing."

Capitalists appropriate surplus value, unpaid labor-time, from workers. Arguing that capitalists "share" profit from workers with workers is like arguing that muggers "share" profits from mugging with their victims when they leave one victim $2.75 for a single-ride Metrocard.

Capitalists may appropriate a larger or smaller portion of the surplus value, a portion dependent upon the level of organization of the working class, market conditions, but the appropriation is always an appropriation, an equal exchange that is in fact, unequal. "Sharing" is the mythology flogged by the bourgeoisie to veil the relations between the value of labor-power and the value that labor-power produces.

Second short version? Advanced capitalist countries have developed extensive networks of transportation, communication, marketing, advertising not just for the purposes of realizing the value embedded in the goods, but to actually hype the the goods even, especially, above their value. Another shocker.

Mr. Smith citing Mr. Norfield explains:

...low wages in Bangladesh help explain "why the richer countries can have lots of shop assistants, delivery drivers, managers and administrators, accountants, advertising and a wide range of welfare payments and much else besides."

Really? The richer countries had lots of shop assistants, delivery drivers, managers, administrators, accountants and an ever wider range of welfare payments before Bangladesh became a contract producer for H&M; before China gained full membership in the WTO in 2001; before the MFA (Multi-Fiber Agreement, or Multi-Fibre Accordance) expired in 2005 and China doubled its portion of global clothing exports.

Smith/Norfield continues:

...oppression of workers in the poorer countries is a direct economic benefit for the mass of people in the richer countries.

Fecking brilliant, ain't it?

Let's start with the cotton. Workers in the United States, utilizing hand and machinery, pick and process the cotton. These workers are paid X wages, articulated as an hourly rate paid for the entire working day Y. In reality, the workers reproduce the value equivalent to X in Y minus Z hours, the remaining time being surplus time, surplus value, belonging to the owner of the means of production, the property, that becomes the cotton. The cotton workers are paid lower wages than other workers.

That cotton gets loaded into a truck, operated by a truck driver who makes a greater hourly rate than the cotton workers, but still reproduces the value of his own wage in less than the complete time of working day, yielding the employer of the driver a surplus value.

The truck is driven to a port, where the cotton in bales, maybe in containers, is unloaded from the truck by cranes manned by crane operators who definitely get paid more than the truck driver or the cotton workers, but again reproduce a value equivalent to that wage in less than the full working day.

The container containing the cotton bales is loaded onto a container ship, built in the shipyards of South Korea, by workers receiving an hourly wage lower than the crane operator but above that of the cotton workers. The shipyard workers still reproduce the value of their own wage in less than the entire working day, week, month, year.

The ship is owned by Maersk, carries 12,000 containers and is crewed by a staff of....14 including approximately 7 officers. Get that? 12,000/14/7. And a few more numbers: length, 366 meters; beam, 49 meters; crew, still 14. By the way, container fleet size, measured in deadweight tons (dwt) has increased by a factor of 15 in the last 35 years.

So clearly in our daisy chain of sequential, and layered, exploitation, the lower wage rates paid to the cotton workers are essential to the entire network that circulates the capital. All additional steps simply "pile on" and participate in the distribution of the surplus-value extracted from the cotton workers, even that labor of the shipyard workers in South Korea, who wouldn't have any jobs if it wasn't for the lower wages of the cotton workers, not to mention the still lower wage rates for the Bangladeshi workers.

Right? Not right? Nonsense, you say?

So do I.

That, the above, is clearly nonsense, but no less clear, and no more nonsense than Smith/Norfield's conclusion. The point being that production of the t-shirts in Bangladesh, like the production of soybeans in Brazil, machine tools in Germany, cotton in the US, automobiles in France, is a circuit of capital that is itself part of, and made up of, other linked, continuous, but discreet circuits. The production of any one of these commodities can be made to appear as supporting a network of communications and transportation offering services and products the total price of which far exceeds the value generated in the "original" or "base" commodity, but that fee, those prices, for those services and products do not constitute increased or intensified -exploitation of the labor power of the workers producing the original commodity.

The owner of the truck(s) is exploiting the labor, and capturing a portion of the surplus value thrown into the entire circuit of capital, which includes the surplus value created by the truck driver(s). The port is capturing a portion of the surplus value thrown into the entire circuit of capital by the cotton producers, the truck drivers, the crane operators, and that thrown into the circuit by the shipping line crews. All this is accomplished through exchange and by price. Price not only represents the value of the service of the object in monetary terms, but also represents the size, efficiency, development, of the capital.
So...for example, if the trucking company raises its price for hauling the baled cotton to port, that is an attempt to change the distribution, the allocation, of the available surplus value. The price increase does not amount to additional exploitation of the cotton workers. The owners of the cotton enterprise may attempt to offset that additional cost by increasing the exploitation of the workers, but nothing in that additional exploitation, as nothing in the hauling rate increase, amounts to a "benefit" to the truck drivers, or the crane operators, or the port's drayage employees, or the ship's crew.

The careful reader of the Smith/Norfield parable will notice that in the advanced countries, the various players (state, executives, advertisers, retail merchandisers) are all sharing, not in the profit of the Bangladesh based t-shirt manufacturer, but in the mark-up of the t-shirt price when it reaches Germany. That mark-up is based, in part, on the value accruing to the commodities through the labor performed in parts of the circulation process.

The mark-up is also a form of arbitrage of the individual value, the necessary time to produce these particular t-shirts in relation to the socially necessary time to reproduce the general commodity "t-shirts." The t-shirts are sold above their value, the labor time of production, embedded in them, but below the social value, the time necessary to produce t-shirts.

While we're on the subject of surplus-value and exploitation, it's a bit of a gob-smack that in discussing the exploitation of the Bangladeshi factory workers, Mr. Smith doesn't take the time to give us an indicator of how great the magnitude and rate of surplus value, how intense the exploitation really is. He gives us some numbers that I think we can use, but he doesn't make the effort to tease out an index to the exploitation.

I took a shot at it, believing that we can get an indication of those magnitudes and rates, establish a calculus- an approximation by accepting price as a proxy for value.

So let's see, according to Smith/Norfield, the worker at the factory earns €1.36 per day (just about the initial price of the t-shirt), for a 12 hour day, producing 250 shirts per hour, or 3000 shirts per working day. At €1.35 per shirt, the value of the wage is reproduced in 14.4 seconds. Now 40 cents of each shirt price represents the cotton, and although we don't know the cost of the inputs like electricity, machinery, maintaining the work place, security to intimidate the workers, etc. we can ignore that cost completely (as Marx does in Capital, setting it to zero), or select an amount arbitrarily. I'll arbitrarily assign a cost equal to the price of the cotton to represent all other input costs, another 40 cents per shirt.

In a workday, then 3000 shirts are produced at a cost of €2401.36 but with a value of €4050. The mass of surplus value appropriated is €1646.64, and the rate a cool 1212: 1.

Now Mr. Smith calls this rate, or something like this rate, "super-exploitation." I do not disagree. I think the identification of super-rates of surplus value extraction is a critical component to apprehending, and overthrowing, the domination of capital, the accumulation of human time as the property of others.

I think the identification of super rates of surplus value extraction forces us to review what and why Marx did not grapple with super-exploitation in the abstract in his theoretical expositions of surplus value in Capital, while Marx most certainly did produce examples of super rates of surplus value extraction in his practical discussions of the demands imposed by valorization process.

I think we need to understand why Marx's "default" condition, was the condition where labor power was compensated at its value, at its cost of reproduction, and why the actual compensation of labor always, like the price of all commodities, oscillates, deviates from its value.

I do not agree that this super-exploitation amounts to a "benefit" to workers in advanced countries; or that capitalists in the advanced countries "share" the profits of super-exploitation with workers.